[COURT OF APPEAL]

ECCLES v. BRYANT AND POLLOCK.

Vendor and purchaser - Sale "subject to contract" - Draft contract signed by both parties - Withdrawal of vendor before completion of exchange - Effect.

Where parties enter into an agreement for the sale of real property "subject to contract," the contract, in the absence of express agreement to the contrary, is not complete until the parties have exchanged their copies in accordance with ordinary conveyancing practice, and until such exchange is effected either party can withdraw.

Where such exchange is intended to be carried out through the post, the moment of completion is at any rate not earlier than the putting of the later copy in the post.

Quaere whether the effective time is that of posting or of receipt by the other party.

APPEAL from Vaisey J.(1).

In April, 1946, the defendants agreed to sell and the plaintiff to buy "subject to contract" a house known as "Barns Branford," Brick Lane, Newchapel. The respective solicitors prepared and agreed the draft contract, and on June 11, 1946, the vendor's solicitors wrote to the purchaser's solicitors: "Our clients have now signed their part of the contract herein and we are ready to exchange and shall be glad to hear from you." The purchaser's solicitors raised certain further questions, but on June 18, 1946, they wrote: "We enclose herewith the contract signed by our client, and shall be glad to receive in exchange the part signed by your clients." On the same date (and therefore before receiving the purchaser's part of the contract) the vendors' solicitors wrote: "We are instructed to inform you that our clients have decided not to proceed with the sale to your client owing to the delay which has occurred on your client's part in dealing with the matter. They have accordingly disposed of the property elsewhere."

The purchaser brought an action and Vaisey J. made the usual order for specific performance in a purchaser's action. The vendors appealed.

Neville Gray K.C. and Hubert Rose for the defendants. Where the terms of a sale of land have been come to "subject to contract," the essence of a binding contract is the exchange of two parts signed by vendor and purchaser respectively. Signature without exchange is not enough. If, however, there

(1) [1947] Ch. 661.

is only one document and both parties sign it, no exchange of documents is necessary. The need for that is waived by both parties signing the single document. An agreement to exchange parts by post is often made by the solicitors to the parties, and then the contract of sale is not completed till each party receives the part signed by the other party. Alternatively, on the offer being made by post by sending a signed part, the acceptance is made, at the earliest, as soon as the other signed part has been put in the post. Vaisey J. held that the letter of the vendors' solicitors, dated June 11, was an offer but there are three answers to this: (1.) the letter contained no offer; (2.) the solicitors had no authority to make an offer for the vendors; (3.) that letter was not treated as an offer by the other side. The letter of June 11 merely stated that the vendors had signed their part and went on to invite the purchaser's solicitors to exchange parts. That is not an offer and the contract could not be completed till the solicitors had received the purchaser's signed part and posted back the vendors' signed part.

[LORD GREENE M.R. When the expression "subject to contract" is used I have never known a case where it has been suggested, much less held, that this did not import that there is nothing binding till the exchange of parts of the formal contract has been made.]

That is the defendant's first proposition which was disputed in the court below. In support of it we would refer to passages in certain authorities. The first is Chillingworth v. Esche (1). Other material authorities are Lockett v. Norman Wright (2) and Keppel v. Wheeler (3). Trollope & Sons v. Martyn Brothers (4) was disapproved in the House of Lords in Luxor (Eastbourne), Ld. v. Cooper (5) but not as regards the point for which it is cited that until contracts are signed and exchanged, there is no binding contract where the purchase is made subject to contract: see also Spottiswoode Ballantyne & Co. v. Doreen Appliances, Ld. (6). [They were stopped.]

Fox-Andrews K.C. and R. E. Hopkins for the plaintiff. The merits of the case are clearly with the plaintiff on the correspondence. The court, however, has to determine the true meaning and effect of the phrase "subject to contract."

(1) [1924] 1 Ch. 97, 113, 114.

(2) [1925] Ch. 56.

(3) [1927] 1 K. B. 577, 586, 589.

(4) [1934] 2 K. B. 436, 443, 447.

(5) [1941] A. C. 108.

(6) [1942] 2 K. B. 32.

It is contended that all that is required is that the parties should be ad idem in all respects and record it in appropriate form whether by one or two documents with an intention that the document or documents should be acted on. Here both documents were signed with that intention. To state the law more fully the effect of the words "subject to contract" is this, and no more than this, namely, that before the bargain becomes binding, the following requirements should be observed and performed: (1.) the parties must have reached agreement on all points; (2.) each of the parties must have recorded his agreement in a document signed by himself or his authorized agent or otherwise acknowledged by him as his document, and in both cases that signature must be placed on the particular document with the intention of being bound; (3.) the fact that each document has been so brought into existence shall be communicated to the other party.

It is accepted that the exchange of the parts of the contract is in practice very frequent but it is not legally necessary. That is merely a convenient way of carrying out the third essential. This precise point has never before been considered by the court. In both the first and the latest editions of Williams on Vendor and Purchaser (p. 4 in both) it is said that "contracts for the sale of land are generally concluded, on a sale by private treaty, by the signature by both parties or their agents of a formal written contract." In neither edition is there any reference to exchange after completion or the necessity for any such exchange. Admittedly the fact of signature must be communicated to the other party, but exchange is merely one method of communication, which in this case was made by the vendors' solicitors in their letter of June 11.

It does not follow because a practice is usually followed at a certain stage, that it is an essential part of the contract. Who could really doubt on the facts of this case that these two gentlemen had made a contract? Something more required to be done before conveyance, but nothing remained to establish the contractual relation. On proof of these facts, there would be an obligation to execute the conveyance.

[COHEN L.J. Does it not come back to this: What did the vendors intend when they signed that document? They did not intend to be bound immediately, for they did not know whether the other party would sign. Is not the question

whether they gave it to their solicitor to be completed by exchange or to be completed by communication?]

The word "exchange" has only begun to be used in this connexion since 1919. In none of the reported cases. has the question whether documents have been exchanged come in issue. Phillips v. Edwards (1) was a case of a deed: and as to the necessity of delivery there is no doubt. The strongest authority against us is the dictum of Bankes L.J. in Keppel v. Wheeler (2). Chillingworth v. Esche (3); Lockett v. Norman-Wright (4); Wilson v. Balfour (5); and Trollope & Sons v. Martyn Bros. (6) are consistent with the purchaser's argument, though the reference to Winn v. Bull (7) in the last named is not clear, since it has no reference to exchange. They referred also to Rossdale v. Denny (8).

The second point is whether the judge was right (as it is submitted that he was) in finding that the vendors were bound because they made an offer by their letter of June 11, which was accepted.

Where parties to a bargain "subject to contract" have intimated by their conduct that the post shall be substituted for personal exchange across a table in the solicitor's office, the contract is completed when the first party puts his signed part in the post.

LORD GREENE M.R. This case is one of that long series of cases which no doubt will go on as long as contracts take place, in which one party to a transaction, which was intended to produce a contract and was carried on on the usual condition that it was to be subject to contract, is attempting to say that a contract came into existence at a date on which the other party says that negotiations had not yet been completed and that no binding contract had come into existence at all. That type of case is extremely familiar in these courts. Each case, of course, differs on its own facts, but the attempt similar to that which is made here is the common form of attempt that is made.

The parties were minded to enter into a contract for the sale and purchase of a house. The matter was put into the hands of their respective solicitors in the ordinary way. The

(1) (1864) 33 Beav. 440.

(2) [1927] 1 K. B. 577, 587.

(3) [1924] 1 Ch. 97.

(4) [1925] Ch. 56.

(5) (1929) 45 T. L. R. 625.

(6) [1934] 2 K. B. 436, 455.

(7) (1877) 7 Ch. D. 29.

(8) [1921] 1 Ch. 57.

basis on which the negotiations were being conducted was that the terms set out in the preliminary correspondence were stated to be subject to contract and survey. We are not troubled with the survey. The important words are "subject to contract." This is one of those cases where quite clearly and admittedly no contract came into existence in the earlier correspondence. It is common ground that the parties contemplated a definitive binding contract which was to come into existence in the future. One thing is quite clear on the facts of this case to my mind, that both firms of solicitors, one of whom - that is the vendors' solicitors - practised in East Grinstead and the other of whom, the purchaser's solicitors, practised in London, when they were instructed to carry this matter through by their respective clients, contemplated and intended from beginning to end to do so in the customary way which is familiar to every firm of solicitors in the country, namely, by preparing the engrossment of the draft contract when agreed in duplicate, the intention being to do what I have no doubt at this very moment is happening in dozens of solicitors' offices all over the country, namely, to exchange the two parts when signed by their respective clients. That, indeed is what anyone would have understood, I think, from the language of the earlier correspondence and the words "subject to contract" - that the contract would be brought about in the way I have mentioned, by an exchange of the two parts signed by the respective parties.

Vaisey J. pointed out that what he called the ceremonial form of exchange, namely, the meeting of solicitors in the office of one of them - the vendors' solicitors' office as a rule - and the passing of the two signed engrossments over the table may be taken to have fallen - and indeed, no doubt it has - into disuse to a certain extent, particularly when there are firms of solicitors in different parts of the country. He recognized that an exchange by post would, in many cases, take the place of the old more ceremonial exchange, but that an exchange was contemplated by both firms of solicitors from beginning to end appears to me to be clear from what took place and from the correspondence. I am prepared to assume - and I think I should probably be right in assuming - that their intention was that the exchange should take place by post. When an exchange takes place by post and a contract comes into existence through the act of exchange, the earliest date at which such a contract can come into existence, it appears to

me, would be the date when the later of the two documents to be put in the post is actually put in the post. Another view might be that the exchange takes place and the contract thereby comes into existence when, and not before, the respective parties or their solicitors receive from their "opposite numbers" their parts of the contract. It is not necessary here to choose between those two views. I mention them particularly because Mr. Hopkins, for the purchaser, here tried to suggest an intermediate stage, that where the parties contemplate an exchange by post the contract is completed not when an exchange takes place, but when one of the parties puts his part into the post. I am afraid I cannot accept that. It seems to me to be a contradiction in terms to speak of that as an exchange.

For the justification, I think, of what I have said, that the parties - or, at any rate, the solicitors - throughout were contemplating exchange, and nothing short of exchange, I will refer to some of the correspondence. The first letter I need mention in that connexion is a letter of June 4 from the vendors' solicitors to the purchaser's solicitors. They refer to the vendors' requirement that the purchase be completed on or before June 24, and end up by saying: "We await hearing from you when the contract has been signed by the purchaser." A little earlier on they refer to "our part of the contract which we are having engrossed." They were doing what is the ordinary thing in a case where a contract is to be in two parts. They were preparing their own part and they speak of the purchaser signing his part - the ordinary letter which one solicitor writes to another. It is no good making an arrangement for an exchange until you know that both parties have signed. That is a common form of inquiry that solicitors make.

The next letter is very important because the decision of the learned judge appears to me, if I understand it aright, to turn entirely upon it. It is a letter of June 11 from the vendors' solicitors to the purchaser's solicitors. In it they say: "Our clients have now signed their part of the contract herein and we are ready to exchange and shall be glad to hear from you." Those last words mean nothing more than this: "We shall be glad to hear from you when you are ready to exchange." That is the sort of question that solicitors regularly ask one another for the purpose of arranging a convenient exchange. That letter clearly contemplates an exchange. It announces that they have signed their part of the contract and they are prepared to exchange.

Then comes the purchaser's solicitors' letter on the June 14. They say: "We are obtaining our client's signature. We will forward you our client's part of the contract in due course." On June 15, the vendors' solicitors reply: "We must repeat that if the matter is to go through, contracts must be exchanged immediately and it must be completed by the 24th instant." On June 18 the purchaser's solicitors write: "We accordingly enclose herewith the contract signed by our client and shall be glad to receive in exchange the part signed by your clients." The vendors changed their mind and did not send their part in exchange.

It is said that a contract took place when, in response to an alleged invitation on behalf of the vendors, the purchaser signed his part of the contract and communicated the fact to the vendors. It was argued that there is no necessity in this class of case for an exchange of documents at all, and that the references which have taken place in very many judgments in this court and other courts to an exchange are either inaccurate or wrong; a contract in this class of case, it is said, does not require exchange. The answer to that seems to me to be a simple one. When parties are proposing to enter into a contract, the manner in which the contract is to be created so as to bind them must be gathered from the intentions of the parties express or implied. In such a contract as this, there is a well-known, common and customary method of dealing; namely, by exchange, and anyone who contemplates that method of dealing cannot contemplate the coming into existence of a binding contract before the exchange takes place.

It was argued that exchange is a mere matter of machinery, having in itself no particular importance and no particular significance. So far as significance is concerned, it appears to me that not only is it not right to say of exchange that it has no significance, but it is the crucial and vital fact which brings the contract into existence. As for importance, it is of the greatest importance, and that is why in past ages this procedure came to be recognized by everybody to be the proper procedure and was adopted. When you are dealing with contracts for the sale of land, it is of the greatest importance to the vendor that he should have a document signed by the purchaser, and to the purchaser that he should have a document signed by the vendor. It is of the greatest importance that there should be no dispute whether a contract had or had not been made and that there should be no dispute as to the terms of it. This

particular procedure of exchange ensures that none of those difficulties will arise. Each party has got what is a document of title, because directly a contract in writing relating to land is entered into, it is a document of title. That can be illustrated, of course, by remembering the simple case where a purchaser makes a sub-sale. The contract is a vital document for the purpose of the sub-sale. If he had not got the vendor's part, signed by the vendor, to show to the sub-purchaser, he would not be able to make a good title.

If the argument for the purchaser is right and the contract comes into existence before exchange takes place, it would mean that neither party could call upon the other to hand over his part. The non-exchanged part would remain the property of the party who signed it, because exchange would be no element in the contract at all and therefore you could get this position, that the purchaser might wish to resell and would have no right to obtain from the vendor the vendor's signed part.

Mr. Fox-Andrews brushes that sort of difficulty aside and also the difficulty of ascertaining the exact terms of the contract which would be involved where there was no exchange. He says we are dealing here with honourable people. I have not the faintest doubt that is the case, but a little experience in these courts leads one to suppose that it is not always the case in dealing with land. The vendor who likes to keep and refuse to hand over a document of title when he is under no obligation to hand it over is a very common creature. That is why in conveyances there is always an undertaking to produce documents, and so on. The parties were clearly contemplating, in my mind, that an exchange should take place. I am quite prepared to assume that the exchange they were contemplating was an exchange by post, but the great thing was that it was an exchange.

Now, reverting to the argument that all references to exchange in earlier authorities are wrong, I would call attention just to one or two. I am not going to quote many. I purposely quote in this context the language of two learned lords justices. very experienced, if I may say so, in matters of this kind, and particularly in conveyancing matters. One was Sargant L.J. in Chillingworth v. Esche (1). The question in that case was whether a purchaser, who, on a proposal to enter into negotiations "subject to contract," had paid a deposit, or, rather, what was analogous to a deposit, was entitled to get

(1) [1924] 1 Ch. 97, 114.

it back if no contract was ever entered into. What Sargant L.J. says is this: Having found that no contract had come into existence under the original letters which were all subject to contract, he says: "Then on the basis that the contract is conditional, what is the result of the payment of the deposit? One obvious object of such payment was that it should form a deposit in the ordinary way if and when the contemplated definite contract was subsequently signed and exchanged."

The other one was Maugham L.J. in George Trollope & Sons v. Martyn Bros. (1). No doubt by way of dictum, because it was not the actual point that was before the court, he said this "In my opinion the fact that there was an offer and acceptance 'subject to contract' presents no difficulty in this case and, properly considered, is an irrelevant circumstance. Ever since the case of Winn v. Bull (2), if not long before, it has been well settled that the result of an offer 'subject to contract' means that the matter remains in negotiation until a formal contract is executed, that is, if the contract is recorded in two parts, until the formal contracts are exchanged. The cases are referred to in Keppel v. Wheeler (3) and see per Bankes L.J.(4)." Then Maugham L.J. goes on: "Taught by experience in these courts it is every-day practice for intending purchasers of property who are making an offer to make their offer in the form of 'subject to contract,' with the result that they are not at that time bound and have a locus penetenti¾ until the formal contracts are exchanged."

Those references to exchange I merely pick out because the learned judges who uttered them might be thought to have particular experience in this branch of the law, but there are many other references in other cases to the same thing and, indeed, it is common knowledge, if I may say so, among people who are familiar with conveyancing practice that that is the ordinary method of dealing in the case of contracts for the sale of land by private treaty.

Vaisey J., as I read his judgment, took the same view. He took the view that if something had not happened in the course of the correspondence, the general rule would have applied, that the contract would not have come into existence until the ordinary time as contemplated by the parties, namely, exchange. I have never heard it suggested that in a case where the parties contemplate exchange as being the vital thing which

(1) [1934] 2 K. B. 436, 455.

(2) 7 Ch. D. 29.

(3) [1927] 1 K. B. 577.

(4) Ibid. 584.

binds them contractually to one another, they are not entitled down to the very last moment to change their minds and refuse to exchange. That is what took place here; and if it had not been for the event to which I am now going to refer, I think Vaisey J. would have taken the same view in this case.

What took place was this: Both parties did in fact sign their respective parts of the contract. The purchaser put his part in the post and it duly arrived. The vendor did not put his part in the post, but instead of doing so he wrote to repudiate the proposed bargain and declined to go on. There was no exchange. The vendor was doing exactly what he would have been entitled to do if the exchange was to take place over a table. If one assumes that that had taken place and the purchaser had handed over his document to the vendor across the table, no contract would have come into existence if the vendor had said "I change my mind" and refused to hand his part over. That, in my opinion, is elementary and in this case that is exactly what happened, except that the post was used to hand over the purchaser's part of the contract and not a manual delivery over the table.

The event to which I have referred which the learned judge thought was what decided this case was the sending of the letter of June 11 which he construed in a particular way. Before I explain his point, I ought to say this: The principals in this case, in instructing their solicitors, must, in my opinion, be assumed to have given them authority to carry the business through in the ordinary way recognized as the customary way for dealing with conveyancing matters of this kind, in the absence of any evidence to the contrary. It would be quite impossible to carry through business unless one made some such assumption when a principal puts a matter into the hands of a solicitor. I go further than that and say that if the vendor's solicitor in this case had taken upon himself without authority to agree to a method of making the contract, other than the customary method, by dispensing with exchange, he would have been committing a breach of duty to his client and might have found himself liable for very heavy damages for negligence.

It is argued, and the learned judge found, that although in his view, as I read his judgment, the making of the contract by exchange was intended and contemplated, there was a change of intention on June 11, 1946, and by that letter an offer was made to adopt a method of creating the contractual relationship different from the normal method of exchange. That method

was to be, as I understand it, the communication by the vendors' solicitors to the purchaser's solicitors that the vendors had signed and an invitation to the purchaser's solicitors to put the copy signed by their client into the post, and that the intention was, therefore, that that should be the method of contracting. In my respectful opinion, the learned judge placed upon the letter a construction that it will not bear. I pass over the vital point that there is no evidence that the solicitors were ever given authority to alter what must have been intended, the normal method of procedure in these cases, and to accept a method of contracting which, beside being quite unusual, had very serious disadvantages from the point of view of the client, namely, dispensing with exchange; but I will assume, for the sake of argument, that there was evidence that the vendor and the purchaser had each given his solicitors instructions to depart from the ordinary method. Incidentally, I may point out that the purchaser was called as a witness and no suggestion was put to him by his own counsel that he had ever authorized anything of the kind, and there is not a particle of evidence that either of the principals ever authorized any departure from the normal and customary way of proceeding. But assuming that such an authority was to be inferred, as we were invited to infer it, no such departure ever took place, as I read this correspondence.

I will read the letter again and then I will read the learned judge's construction of it. "Our clients," say the vendors' solicitors, "have now signed their part of the contract herein and we are ready to exchange and shall be glad to hear from you." There is nothing in that to suggest that the procedure of contracting by means of exchange was to be departed from. On the contrary, as it seems to me, it is affirming the intention of the writer that exchange shall be the method of contracting. The learned judge refers, it is true, to other letters, the correspondence in general and some oral evidence, but I am unable to find anything in the other correspondence or the oral evidence which in any way confirms his view. What he says is this "I think that what the defendants' solicitors in fact said was 'We have signed our part of the contract, so that if you sign your part and post it to us, the matter will be in order'." With the utmost respect to the learned judge, it appears to me that that is a paraphrase of the letter which is quite inadmissible It appears to me to fly right in the teeth of the actual language used, which quite clearly is contemplating exchange and nothing short of exchange.

One more paraphrase, more or less to the same effect, appears in the learned judge's judgment where he says this: "The circumstances of the case are unusual, but on the whole I think that it did become binding when the plaintiff, in response to the defendants' invitation, put his signed part of the contract into the post on the afternoon of June 18." There again, I cannot find in that letter or anywhere else anything which justifies the idea that any such invitation was ever made, quite apart from the question of authority to make it. That the letter of June 11 was never understood in that sense, appears I think pretty clearly from the purchaser's solicitors' letter of June 18: "We accordingly enclose herewith the contract signed by our client and shall be glad to receive in exchange the part signed by your clients." They are contemplating again that there is to be an exchange. If in point of fact the vendor had delayed in sending his part of the contract to the purchaser's solicitors, at any rate down to the time when the vendor put his part in the post, the purchaser's solicitors could have cried off, just as much as the purchaser's solicitors in an exchange over a table can cry off at any moment before the vendor hands over his part of the contract.

It is of the greatest importance, it appears to me, that these principles should be upheld. The inconvenience and chaos into which these matters would be thrown by the adoption of any other rules appear to me to be very great; but ultimately the matter comes down to this: Parties become bound by contract when, and in the manner in which, they intend and contemplate becoming bound. That is a question of the facts of each case, but in this case the manner of becoming bound which the parties and their solicitors must have contemplated from the very beginning was the ordinary, customary, convenient method of exchange. From that contemplation neither side and the solicitors to neither side ever resiled, and there is no justification for taking the view that some new method of making the contract was ever contemplated by anybody.

With great respect to Vaisey J. I cannot agree with his conclusion and, in my opinion, the action must be dismissed.

COHEN L.J. I agree; but, as we are differing from the learned judge in the court below, I will state shortly my reasons for my conclusion.

As the Master of the Rolls pointed out, this is one more of the

many cases arising out of preliminary agreements, if they can be so called, subject to contract. It differs from the reported cases in that in this case both parties had signed their respective parts of what might have become the final agreement, but I think the principles applicable are the same. As I understand the judgment of the learned judge in the court below, he states three propositions of law, or principles of construction, whichever be the right term to apply to them, and they are as follows: The first is that where a document or preliminary agreement is expressed to be subject to contract, it means and implies that the parties do not intend to be bound until another document embodying all the terms of the agreement between them is signed by the parties and becomes binding on them. That, I think, is common ground between the parties to this case. The second proposition is this: Normally, that time will be when the contracts - that is, the further documents - are exchanged, since that is the date on which contracts normally become binding in accordance with the usual conveyancing practice. That proposition is, of course, supported by the passages from the judgments of Maugham and Sargant L.JJ. which my Lord has already read. I can find no passage in any judgment in any of the cases to which our attention has been called which is inconsistent with them. It is true that in Keppel v. Wheeler (1), while Bankes and Sargant L.JJ. in plain and unmistakable terms express the view that the matter remains in negotiation until the formal contract is settled and the formal contracts are exchanged, Atkin L.J. leaves open the question whether the date at which a concluded contract comes into being is the date when both parties sign or the date when the contracts are exchanged. But he expresses no view in favour of the earlier date, and I respectfully adopt the observations, dicta though they may be, of Maugham and Sargant L.JJ., who were well versed in questions of this kind, as correctly stating the law on that subject. The third proposition is this: It is not part of the law of the Medes and Persians that the contract must become binding at the date on which the contract is exchanged and at no other time, for if the parties so express themselves that it is plain that they intended to become bound at some earlier, or, for that matter, later, time, that time will be substituted for the time of exchange.

With those propositions (which I think are substantially the propositions on which the learned judge decided the case and indeed which Mr. Fox-Andrews asked us to adopt) I

(1) [1927] 1 K. B. 577.

entirely agree, but where I differ from the learned judge is in the application of those propositions to the facts of this case. He took the view that he could spell out of the letter of June 11, coupled with the defendant's signature on the draft contract an offer which was accepted by the plaintiff's signature and his solicitors' letter of June 18. This, he said, was an offer and an acceptance and accordingly the contract became binding when that letter of June 18 was put into the post.

In my view, this is placing an impossible construction on the words used by the solicitors in the letter of June 11. As the Master of the Rolls said in the course of argument, and again in his judgment, that letter of June 11 was just the ordinary letter which any solicitor familiar with this kind of thing would be expected to write, and was maintaining the view that an exchange was necessary not merely as a matter of procedure, but in order that a binding contract should be made. They say "We are ready to exchange," and I think Mr. Gray was right in saying that the letter of June 18 accepted that view because Messrs. Godfrey Warr & Co., say: "We accordingly enclose herewith the contract signed by our client and shall be glad to receive in exchange the part signed by your clients," thus implying, I think, that the receipt of the part in exchange was an essential ingredient of the arrangements between them.

In my view, therefore, there was no offer and nothing which could be accepted by the letter of June 18; but, if there was an offer, what authority had the solicitor to make it? It seems to me to be plain from the cases which were cited to us, including the case of Lockett v. Norman-Wright (1), that the solicitor would have no authority to make any such bargain. In that case, Tomlin J., as he then was, said: "Solicitors are not, in the absence of specific authority, agents of their clients to conclude a contract for them and I do not think that I can read this letter" - the letter in that case - "as making the solicitors agents to conclude the bargain or arbitrators to settle its terms." In the present case there was no evidence of any authority being conferred on the solicitors to make such a bargain, and I think that fact is perhaps an additional reason why we should place the natural construction on the letter of June 11 and not impute to the solicitors an intention to make a bargain which they had in fact no authority to make.

There is only one other matter to which I wish to refer. The Master of the Rolls said, and I entirely agree, that probably

(1) [1925] Ch. 56, 62.

in this case what the parties contemplated was exchange by post. On that basis, Mr. Hopkins asked us to take the view that exchange was completed when the first document was put into the post. That seems to me to be an impossible argument, because that would be not exchange but a unilateral transaction. I think, without deciding what is unnecessary, that in all probability the correct view as to the effect of an arrangement to exchange by post is that which was put by the Master of the Rolls in the course of the argument, namely, that the earliest date on which on that basis an exchange could be effected would be the date on which the latter of the two documents was put into the post.

For these reasons, I agree with the Master of the Rolls that the appeal must be allowed and the action dismissed.

ASQUITH L.J. I agree with my Lord. It appears to me, with the greatest respect to the learned judge, that he has founded his entire judgment on a fallacious construction of the letter of June 11. Until that letter there was a transaction for sale of land "subject to contract" and if there had been no letter of June 11, I think the learned judge would have agreed that the parties should be taken not to have intended to be bound until exchange of the contracts, but he held that the letter of June 11 marked a new departure and constituted a new offer on behalf of the sellers, an offer to be bound by something short of a complete exchange, whether manual or postal. The effect of that letter, according to him, is that the sellers' solicitors are saying "We have signed our part of the contract, so that if you sign your part and post it to us, the matter will be in order," meaning by that "the seller will be bound." Treating the letter as amounting to an offer and an offer of that tenor, the learned judge concludes quite logically that when on the afternoon of June 18 the buyer posted his signed copy of the contract to the seller, that was an acceptance; that the seller was bound from that moment and that the seller's withdrawal which was not communicated until the next morning came too late. But I agree with my Lords that the learned judge was mistaken in regarding the letter of the eleventh as a new offer or as an offer at all, let alone an offer to dispense with the requirements of exchange. Apart from conveying a routine inquiry, that letter, it seems to me, reaffirms the pre-existing position under which the parties would not be bound until contracts were exchanged. It was accepted in that meaning. It was so understood, quite clearly, by the buyer's solicitors,

who, as has been pointed out, in their letter of the eighteenth enclosing the contract signed by their client, say "We shall be glad to receive in exchange the part signed by your clients."

If this is so, the major premise on which the judgment proceeds is erroneous and the conclusions founded on it do not follow. Mr. Fox-Andrews has argued that it has never been expressly decided that in a contract for sale of land "subject to contract" exchange is a pre-condition of the birth of a binding bargain. This is, I think, literally true, but the explanation may well be that the proposition was thought to be beyond challenge. It is asserted in a number of dicta in this court by judges of the greatest experience, which dicta, so far as I know, have never been questioned by higher authority, and the practical inconveniences of rejecting it are formidable. If Mr. Fox-Andrews is right, a seller on a "subject to contract" transaction might find himself bound if the buyer simply informed him that he, the buyer, had signed his copy of the contract. Such a rule would be most inconvenient. The seller might have no means of telling whether the buyer's assertion was true. If it was, he would find himself bound, but not possessed of tangible proof of the buyer's obligation in the form of a copy of the contract signed by the buyer. It seems to me a plain (though, of course, a rebuttable) presumption that neither party would normally wish to be bound to the other in the absence of such a vital security as is afforded by physical possession of a copy of the contract signed by the other.

I would only add that a passage was cited by Mr. Fox-Andrews from Williams' Vendor and Purchaser, p. 4, in support of his argument that exchange was not necessary, but in this passage it seems to me the learned author is not directing his mind to the question whether exchange is or is not necessary to the formation of the contract but merely to the difference between the character of the documents employed where land is sold by private treaty on the one hand and where it is sold by auction on the other.

For these reasons and for those given by my Lords, I agree that the appeal should be allowed.

Solicitors for the vendors: Nisbet, Drew & Loughborough, for Pearless, de Rougemont & Co., East Grinstead.

Solicitors for the purchaser: Godfrey Warr & Co.

J. W. H.